PM Gati Shakti to unlock trade potential of Northeast India

NE Now, January 17, 2022

By Suresh P Singh and Md Quaisar Ali

Large-scale absence of coordination and collaboration among agencies has been a major challenge to time bound infrastructure project implementation in India.

Very often these projects have faced time overruns, leading to significant cost escalations

As per the Ministry of Statistics and Programme Implementation (MoSPI), Government of India, in the beginning of 2021, 1,687 Union Government projects under implementation, valued more than Rs 21.45 lakh crore, had run into cost overrun of nearly 20 percent, largely because of their delays.

For instance, 311 railways projects show time overruns in the range of two to 324 months, while in case of 858 road development projects time overruns are in the range of one to 152 months.

Factors cited for time overruns are underestimation of original project cost, spiralling land acquisition cost, delays in environment, forest and wildlife clearances and industrial licensing permission, road crossing of pipelines/transmission lines, shifting of utilities, delays in the tie-up of project financing, delays in finalisation of detailed engineering, etc.

In addition, there are bottlenecks at the State Government level such as issues in land acquisition and removal of encroachments, relief and rehabilitation planning and implementation, timely issuance of no objection certificate, necessary power and water supply, and work order related issues.

At the core of these cost and time overruns lie the ill-coordinated efforts on the imperative of synchronisation of infrastructure projects for their timebound implementation.

All this could change now

The recently announced Prime Minister of India’s Gati Shakti National Master Plan for Multi-Modal Connectivity is all set to revolutionise the way infrastructure and logistic development projects are planned and implemented in India. It will bridge huge differences between macro planning and micro implementation.

The Plan is essentially a digital platform to bring 16 Ministries, including Railways and Roadways, together for integrated planning and coordinated implementation of infrastructure connectivity projects.

PM Gati Shakti will cover the infrastructure projects worth over Rs 500 crore of various Ministries of the Union and State Governments like Bharatmala, Sagarmala, inland waterways, dry/land ports, UDAN (Ude Desh ka Aam Nagarik – subsidies for facilitating air travel), etc.

The aim is to ensure that these projects are implemented in a coordinated and timebound manner so as to provide integrated and seamless last mile connectivity for the movements of people and cargoes from one mode of transportation to another.

Infrastructure Projects in Northeast India 

The Northeast region of India, comprising eight states, namely Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura, share almost 12,000 kilometres of international border with Bangladesh, Bhutan, Myanmar, Nepal and Tibet, and is connected with the rest of India by a narrow chicken-neck, having a width of approximately 20 kilometres, which is popularly known as the Siliguri Corridor in West Bengal.

This has primarily kept the Northeast India’s trade potentiality under-utilised, which is understood to be much more than the realisation of Rs 3,577 crores in 2019-20 and Rs 3364.4 crores in 2020-21 as per the data as provided by the Directorate General of Commercial Intelligence and Statistics, Government of India.

Estimates show that the Northeast region produces significant marketable surplus in a large number of perishable commodities, including banana, pineapple, orange and tomato.

For example, banana production in the region is estimated at 1.2 million tonnes a year and only about a fifth is consumed locally, indicating that the region can export a huge quantity of this perishable product to neighbouring countries if transport connectivity and infrastructure improves.

Contrary to this, as per a NITI (National Institute for Transforming India) Aayog report titled “India – Three-Year Action Agenda 2017-18 to 2019-20”, 95 percent of India’s exports to neighbouring states of Bangladesh, Bhutan and Myanmar are from regions other than Northeast India.

The thinking has, however, started changing for the better with the launch of India’s Act East Policy in 2014, replacing it with the Look East Policy of 1991. Considering the strategic location of the region and its potential to serve as a gateway to the Southeast Asia in our extended neighbourhood and to the Indo-Pacific region at large, this is a significant shift from our west-centric foreign policy to make it more balanced with necessary emphasis on the east.

As a result of this, there is a thrust on implementing a large number of Union and State Government funded infrastructure development projects in Northeast India with the purpose of improving its internal as well as external connectivity. As per the MoSPI, there are 143 ongoing projects in Northeast India, worth an original budget of Rs. 97,418 crores in the beginning of 2021.

For example, in Assam, Manipur and Sikkim several bridges are under construction covering 28.48 kilometres and all of them are expected to be completed by 2028.

Also, there are a large number of road-widening projects under the Special Accelerated Road Development Programme and the Bharatmala Pariyojana, including Externally Aided Projects supported by the Asian Development Bank and the Japan International Cooperation Agency, covering approximately 3,300 kilometres with sanctioned cost of Rs 60,211 crore, which are likely to be completed during 2024-28.

For a better regional connectivity, projects to connect Samdrup-Jongkhar in Bhutan and Guwahati, and the trilateral highway between India, Myanmar and Thailand are also under implementation.

However, many of projects have run into cost escalation over the original budget of Rs. 97,418 crores, with an anticipated rise to Rs 140,547 crore, or by 44 percent of their original estimated cost, as per MoSPI.

In states like Arunachal Pradesh, Manipur and Meghalaya, cost escalations are as high as 90 percent or more.

Furthermore, Indian Railways is working in a mission mode to connect all capital cities of Northeastern states into a rail network. Three out of eight capital cities, that is of Assam, Arunachal Pradesh and Tripura, have already been connected with railway networks and work is in progress to connect three other capital cities of Manipur, Mizoram and Nagaland by March 2023.

The entire railway network in the Northeast has been converted to a broad-gauge network.

During 2014 to 2017, a total of 972 kilometers of the railway track have been converted to a broad-gauge network.

For regional connectivity, currently there are four operational rail links between India and Bangladesh, viz. Petrapole-Benapole, Gede-Darshana, Radhikapur-Biral, and Singhabad-Rohanpur.

Moreover, work is in progress to connect Agartala in Tripura to Akhaura in Bangladesh.

The project is likely to be completed in June 202

There is also a proposal to connect Imphal, the capital city of Manipur with Moreh, which is a border town, bordering Myanmar, in this state.

The Ministry of Railways has recently sanctioned the final location survey of about 111 kilometres of the Imphal-Moreh section for the construction of a new broad-gauge railway line.

Similarly, to re-connect the Northeast region with its neighbours through waterways, several projects are in progress or will be undertaken soon. For example, a project is going to be undertaken to connect Haldia in West Bengal to Guwahati in Assam through coastal shipping and inland waterways via Bangladesh.

This will facilitate the movement of export/import and inland cargo from Haldia to Pandu terminal in Guwahati, connecting the Northeast with Kolkata via the National Waterways-2.

Moreover, other than the operationalization of Sonamura-Daudkandi river route over the Gumti River, connecting Tripura with Northeastern Bangladesh, projects have been initiated in river Barak (NW-16), from Silchar to Bhanga in Assam, which includes maintenance dredging, upgradation of terminals at Badarpur and Karimganj with an estimated investment of Rs 76.01 crores.

As there are 15 national waterway channels in Northeast India, strengthening them with navigational facilities would help the region achieve its trade and economic potential.

Furthermore, with regard to regional waterway connectivity, both India and Bangladesh are taking initiatives to improve the operations of waterways transportation, including the construction of the Ashuganj river terminal, which is one of the most strategic locations in Bangladesh for multi-modal transport connectivity between Northeast India and the rest of the world.

The Protocol on Inland Water Transit and Trade (PIWTT) between India and Bangladesh also includes additional ports of call and specifically grants India access to Chittagong and Mongla ports for shipping goods to Northeast India, while the Coastal Shipping Agreement between the two countries provides for direct connectivity between seaports of eastern part of India and Bangladesh.

How would they help accelerating cross-border trade? 

For decades since the geo-political partition of India, absence of proper transport connectivity has been a critical missing link in fostering the development of the Northeast region.

As a result of inadequate transport connectivity, the region has not been able to utilise its capacity and resources for economic development through trade, among other means.

As the region is strategically located and is most critical for realising the objectives of India’s Act East Policy, the on-going road, rail and waterway connectivity initiatives have a huge potential to transform the region into a major spoke for business, with Bangladesh as a hub and other spokes in the rest of the world.

In that manner, the Northeast region will be able to optimally utilise its resources and capacity for trade in several agricultural and horticultural products in particular in which it has significant marketable surplus.

Estimates reveal that the region has marketable surplus in pineapple (95 percent), orange (85 percent), jackfruit (83 percent), banana (79 percent), cabbage (74 percent), cauliflower (69 percent), tomato (67 percent).

Technical, institutional and governmental interventions in agricultural and horticultural value chains, including through better organisation of farmer-producer organisations and self-help groups could substantially increase the scale of processing, maximise returns of producers and minimise post-harvest losses, and that could help the region increase its exports of these products.

Enters Gati Shakti 

As a result of the Gati Shakti, the delayed approach to project implementation in Northeast India is expected to undergo a tectonic shift. This is because most of these projects under implementation, including those under Bharatmala Pariyojana, will now be part of an institutional framework under the Gati Shakti Master Plan.

Infrastructure development projects in Northeast India will experience coordinated planning and timely implementation.

That is an imperative for improving the existing supply chains and for exploring new value chains, including through electronic commerce and the application of new technologies such as blockchain, both for internal and external trade.

This is needed for the region to re-emerge as one of the major trade hubs of India as it used to be before the geo-political partition of India’s boundary.

As articulated by the Hon’ble Prime Minister of India, let us replace ‘work in progress’ with ‘work for progress’ leading to ‘wealth for progress’

Suresh P Singh is a Fellow at CUTS International and Md Quaisar Ali is a Research Associate at CUTS International. CUTS International is a global public policy think-and action tank on trade, regulation and governance. 

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